Fracking giant Halliburton nixes N.C.'s chemical disclosure rule

Published: Friday, May 3, 2013 at 09:51 AM.

“We’re anticipating some changes to the substance of the rule,” Womack said during a meeting of the commission’s Rules Committee. “We still have contention about the rule.

‘Transparency’ questioned

Other commissioners were quick to protest.

“Where is the contention?” Commissioner Charlotte Mitchell, a Raleigh lawyer, fired back. “Is this the way the commission is going to work?”

She added: “There seem to be conversations happening offline and not in public about this rule that has already come out of committee.”

Commissioner Amy Pickle, state policy program director at Duke University’s Nicholas Institute for Environmental Policy Solutions, was also frustrated that the commission’s work is subject to veto by the energy industry.

“I’m very sensitive to surprising the public, the (lack of ) transparency, and wasting time,” Pickle said. “This rule does not have full support in conversations that are taking place outside this process.”

After more than six months of congenial meetings, the N.C. Mining & Energy Commission was set to approve its first fracking rule Friday, perhaps the most important of all the safety rules the commission will write to protect the public and safeguard the environment.

The standard spells out which chemicals fracking operators have to publicly disclose when drilling natural gas wells in North Carolina.

But commissioners learned Thursday the proposal they had approved in committee in March is on ice.

The problem: Fracking giant Halliburton has told North Carolina’s environmental regulators the rule goes too far. The N.C. Department of Environment and Natural Resources is working to get the rule changed.

The developments raise questions about the independence and integrity of the Mining & Energy Commission, a panel created by the state legislature last year to create safety rules for shale gas exploration. Fracking refers to fracturing shale rock formations using high-pressure water and chemicals to release the natural gas trapped inside.

The fracking rule-writing panel is under intense pressure to create rules that don’t discourage fracking and energy exploration. Those pressures were exposed in full view this year when legislation was proposed to remove two members from the commission, including the state geologist.

In the latest challenge to the commission’s autonomy, its chairman, James Womack, stunned his fellow commissioners Thursday with the disclosure that they will not be voting on the proposed chemical disclosure rule Friday as originally planned.

“We’re anticipating some changes to the substance of the rule,” Womack said during a meeting of the commission’s Rules Committee. “We still have contention about the rule.

‘Transparency’ questioned

Other commissioners were quick to protest.

“Where is the contention?” Commissioner Charlotte Mitchell, a Raleigh lawyer, fired back. “Is this the way the commission is going to work?”

She added: “There seem to be conversations happening offline and not in public about this rule that has already come out of committee.”

Commissioner Amy Pickle, state policy program director at Duke University’s Nicholas Institute for Environmental Policy Solutions, was also frustrated that the commission’s work is subject to veto by the energy industry.

“I’m very sensitive to surprising the public, the (lack of ) transparency, and wasting time,” Pickle said. “This rule does not have full support in conversations that are taking place outside this process.”

Fracking operations use dozens of chemicals, ranging from products used as food additives to industrial toxins and carcinogens. The additives are used to maintain fluid consistency, prevent well corrosion and to kill bacteria.

North Carolina is believed to have a small region with shale gas, concentrated around Lee, Chatham and Moore counties. But the precise amount of gas in the ground will not be known until drillers sink test wells.

Stance on trade secrets

The chemical disclosure rule, as approved March 25 by the commission’s Environmental Standards Committee, would exempt certain chemicals from public disclosure if the company demonstrated they are trade secrets. But the rule is contentious because it would require fracking operators to submit those trade secrets under seal to the N.C. Department of Environment and Natural Resources, in case the data is needed to treat injuries during an emergency.

Agency officials, however, don’t want to keep sensitive data on file because the information is a likely target for legal challenges. And Halliburton doesn’t want the government to safe-keep proprietary information that competitors could try to pry loose under freedom of information laws.

‘Most contentious rule’

In some states, trade secrets don’t have to be disclosed. In others, they are safeguarded by energy companies and provided to health officials on a must-see basis.

“This is the most contentious rule in every state,” Womack said after the meeting.

The N.C. Mining & Energy Commission had set out to write the nation’s strictest chemical disclosure law.

Florida State University law professor Hannah Wiseman, who reviewed North Carolina’s proposed chemical rule Thursday, said it was stronger than most other states and includes provisions that should serve as a national model.

‘The process is ongoing’

Womack said the most likely solution up for discussion Friday would be to require oil-and-gas companies to disclose the chemicals they use, but not the precise amounts of each chemical, so their proprietary formula could not be replicated.

But Womack, who is also a Lee County Commissioner, acknowledged he is not sure this approach will pass muster with Halliburton and the industry.

Halliburton’s local lawyer, D. Bowen Heath of the McGuireWoods firm in Raleigh, referred questions to the Texas corporation’s media department. Halliburton spokeswoman Susie McMichael said by email that key people were in meetings or traveling.

Mitch Gillespie, assistant secretary at DENR, later confirmed that the agency and Halliburton don’t want the government safekeeping sensitive information, but declined to elaborate.

“The process is ongoing,” he said.

Commissioner George Howard, CEO at Restoration Systems, a Raleigh company that restores wetlands and habitats, said he was surprised by the turn of events, but hardly distressed by the situation.

Indeed, Howard, who chairs the commission’s Environmental Standards Committee, said he considers the alternate proposal – to disclose chemicals but not amounts – an improvement over the draft rule his committee approved in March.

“I look at it as a list of ingredients versus the recipe,” Howard said.